Game Theoretic Approach for Global Manufacturing Planning Under Risk and Uncertainty

In this paper, we present a game theoretic model in which one manufacturer and its suppliers are coordinated. Quality levels of products from suppliers are considered. Due to fluctuation of demand resulting from varying quality levels, manufacturers are subject to demand-side risks. The objective of the research is to help decision making between manufacturers and suppliers in order to improve level of quality. Stackelberg game is applied to coordinate the manufacturer and suppliers Then, Pareto efficient solutions are utilized to generate supplier's optimal response functions. Computational experiments are conducted to demonstrate the effectiveness of the proposed method.